Railway Budget unlikely to be scrapped soon: Railway Board

New Delhi: The plan to scrap India’s annual railway budget and merge it with the Union budget, as recommended by the National Institution for Transforming India Aayog, or NITI Aayog, may find opposition from the finance ministry.

The change in the almost century-old tradition is unlikely to happen immediately, according to two senior railway ministry officials. They added that the resistance may come from the finance ministry due to the need for provisioning for pensioner expenses.

The Indian Railways is facing a financial crunch and is looking for external financing options to fund projects. At present, there are close to 1.4 million pensioners under the railways who draw Rs.8,000 crore per year. The railways is also staring at an increased financial burden of Rs.40,000 crore, given the 7th Pay Commission recommendations.

“The finance ministry will not agree since it will have to provide for expenses such as pension liability and I am not sure it will want to take on that responsibility,” said a railway ministry official quoted above.

The finance ministry is still to approve a Rs.1.19 trillion railway safety fund owing to financial crunch. The government has sought the railway ministry’s comments on the 20-page note titled ‘Dispensing with the Rail Budget’, jointly authored by NITI Aayog members Bibek Debroy and Kishore Desai, submitted to the Prime Minister’s Office (PMO). It has been endorsed by railway minister Suresh Prabhu.

A separate railway budget neither addressed the railways’ funding requirements, nor made it accountable for delivery. It also says a separate budget has led to politicisation of railway affairs and has failed to ensure time-bound implementation of railway projects.

The first official quoted above added NITI Aayog has asked for comments from the ministry of railways but no decision has been taken till now.

“The ministry of railways has on several occasions said a separate railway budget is not required. The possibility of it being scraped is a call that the PMO or the finance ministry has to take,” said the official.

The development comes at a time when the national transporter is losing traffic, and freight and passenger revenue to roads and air routes.

Queries emailed to the spokespersons of the finance ministry, the railway ministry, the PMO and NITI Aayog on 24 June remained unanswered.

Experts though believe that consolidation will be a positive step for the railway ministry but the merger will depend on how technicalities are dealt with.

“The railways, unlike other ministries, ends up earning as much as it spends. It functions differently from other ministries and as a result, all expenditure will have to be dealt by the finance ministry. The amalgamation of the budget will have to be done very carefully. There are a lot of overseas investments and loans that the railways has to take care of. It will have to be looked into as to who will be responsible for the payment of loans,” said former Railway Board chairman Vivek Sahai.

The railways capital outlay for the financial year 2016-17 is Rs1.21 trillion compared with around Rs1 trillion in the last budget.

The second railway official said that unlike other ministries the railways generates its own earnings and caters to expenditure, the onus of which will fall on the finance ministry if the railway budget is consolidated with the Union budget.

“Railways is a very peculiar kind of ministry. We earn and we spend. The only burden on the finance ministry is the budgetary support. Once the finance ministry takes over the budget, they will have to do the accounting and they will have to take all our books into their account,” added the official.